TERRAFORMING TERRA
We discuss and comment on the role agriculture will play in the containment of the CO2 problem and address protocols for terraforming the planet Earth.
A model farm template is imagined as the central methodology. A broad range of timely science news and other topics of interest are commented on.

Wednesday, April 20, 2011

Tax Reform Again

This news letter from Simon Black is a good short review on competing
taxation regimes from around the globe and shows us again that the Laffer curve
is continuing to perform.

I have long since come to the
conclusion that the best tax regime is to simply tax every transaction at ten
percent, including interest payments.I
would even make the farmers charge the tax for goods produced and sold.This surcharge on every trade is offset only
by paid taxes on appropriate costs.The
whole economy then becomes naturally frugal and wealth assembling.

There would be plenty of
adjustments, but the result would be a naturally operating system, escaped only
through barter for individual avoidance.It still requires the maintenance of records, but those serve a purpose
natural to the enterprise anyway.

What it does not do is produce an
avoidance culture in parallel to the record keeping culture..

Reporting From: Vina del Mar,
Chile

Date: April 12, 2011

Did you ever see Minority Report? It's one of Steven Spielberg's often
forgotten about movies based on the short story by Philip K. Dick. In the
movie, pre-couch Tom Cruise plays a police officer in the year 2054 who works
for the highly specialized 'pre-crime' division.

Using a bizarre array of technology and metaphysics, the pre-crime division
sees into the future and stops criminals in their tracks, arresting them before
they commit a crime... sometimes before they even think about committing a
crime.

This very elaborate and morally ambiguous law enforcement system is predicated
on the government determining what your actions and intentions will be, often
before you do. It's not all science fiction.

A number of politicians and bureaucrats in WashingtonD.C.
are seeking to step up the Internal Revenue Service's powers, and technology,
to essentially audit taxpayers before returns are even filed.

In remarks to the National Press Club last week, an IRS spokesman unveiled the
agency's vision for the "look forward" model in which most of the
pertinent reporting information for the average taxpayer (W2, 1099, mortgage
interest etc.) would be submitted to the IRS well in advance of the individual
deadline.

After a massive upgrade in technology, the IRS would be able to pre-calculate
what it expects to receive in taxes and instantly reject any return that
doesn't comply with its determination.

This may work fine and well for some wage earners... but start throwing in a
few investment accounts, small business income, private partnerships, etc. and
things can quickly diverge from the IRS estimates.

Imagine you start a new business on the side of your usual employment this year
and take an initial loss due to ancillary startup costs. This wouldn't
factor into the machine's pre-calculations of your tax liability, so you would
be immediately rejected and flagged for additional scrutiny.

Makes you want to run out and start a business, or invest your capital in
someone else's, right? Not exactly.

Deep down, I think these people simply want to try and make things more
efficient. Pre-crime is not the way to go. There are a number of
countries that have incredibly successful tax codes, and there are common
themes in all of them:

1) Keep it short. The Baltic countries are a great example of this-- the
entire Estonian tax code is about 70 pages, roughly 1/1000th the size of the US tax code
(which is still prone to so much interpretation). It takes about 15 minutes to
fill out an Estonian return, and you can do it online. In the Maldives, it's
even easier.

2) Keep it simple. When you have a tax code that's so complex it has given rise
to a multi-billion dollar preparation industry, you have a problem. There are
dozens of different forms at the IRS, and over 20 versions for the 1099 alone!
This is a system that is prone to massive flaws and a great deal of
contradiction.

Hong Kong is a great example of a simple
system. Taxes are levied at a flat rate of 15% based on the "territorial
principal" that only income derived from Hong Kong
is taxed. There is no capital gains tax, no VAT, no estate tax, etc. And yet,
the biggest problem the Hong Kong government
faces regarding taxes is how to give away their massive surplus.

3) Keep it low. When you make it easy and painless for people to pay
taxes, it removes most of the incentives for them to cheat. In Singapore, tax
rates are among the lowest in the world with a maximum rate of 20%. The capital
gains rate is zero. The corporate rate varies from 0% to 17% (and keeps
falling).

Under these circumstances, why cheat? By keeping rates low, the government is
removing any incentive to engage in complicated (and costly) tax avoidance
techniques. From a cost/benefit perspective, it's much easier to comply when
rates are low.

4) Keep it friendly. Creating an adversarial relationship with taxpayers
doesn't do anyone any favors. One of the key themes of the world's most
successful tax regimes is that they do not operate like a police agency that's
out to get people. This is a massive hurdle for the IRS to overcome.

Perhaps the polar opposite of this is Switzerland, where tax evasion is
considered a civil matter, not a criminal matter. In Switzerland, the local cantonal tax
authorities actually compete with each other for your business, rather than
sticking you up for cash under penalty of imprisonment.

The US
government is now searching for answers. Behind close doors, politicians are
likely admitting to each other that the kitty is empty and they're completely
bankrupt. They don't have to look far for solutions-- the best models in the
world are already in practice and have been successfully implemented.

Rather than making things easier, less painful, friendlier, and simpler, the US
government seems to be taking the opposite approach-- hiring more agents to
sniff out 'suspicious' activity (defined in their sole discretion), raising
taxes, and relying on fear and intimidation.

I suspect this path will have the opposite effect-- instead of raising more
money for a bankrupt government, it will continue to chase out productive
people. More on that in a future letter.

Until tomorrow,

Simon Black

Senior Editor, SovereignMan.com

Did you receive this email from a friend? Sign Up to receive
Notes From The Field.

Neither this email communication nor content posted to the website
SovereignMan.com is intended to provide personal financial advice. Before
undertaking any action described in this letter, financial or otherwise, you
should discuss your options with a qualified advisor-- accountant, financial
planner, attorney, priest, IRS auditor, Tim Geithner... Also, nothing published
in this letter constitutes encouragement to avoid or evade tax obligations in
your home country. Furthermore, you should understand that
SovereignMan.com may in some instances receive financial compensation for
products and/or services which are mentioned in the letter, and in other cases,
SovereignMan.com receives no compensation. The needs of the community
come first, and the presence or lack of financial compensation in no way
affects the recommendations made in this letter.

No comments:

About Me

18 years old, having cleaned out my HS library, I concluded the only ambition worth having was becoming a great genius. An inner voice cheered. Yet it is my path I have shared much to the Human Gesalt. Mar 2017 - 4.56 Mil Pg Views, March 2013 - Posted my paper introducing CLOUD COSMOLOGY & NEUTRAL NEUTRINO described as the SPACE TIME PENDULUM. Sep 2010 -My essay titled A NEW METRIC WITH APPLICATIONS TO PHYSICS AND SOLVING CERTAIN HIGHER ORDERED DIFFERENTIAL EQUATIONS has been published in Physics Essays(AIP) June 2010 quarterly. 40 years ago I took an honors degree in applied mathematics from the University of Waterloo. My interest was Relativity and my last year there saw me complete a 900 level course under Hanno Rund on his work in Relativity. I continued researching new ideas and knowledge since that time and I have prepared a book for publication titled Paradigms Shift. I maintain my blog as a day book and research tool to retain data, record impressions, interpretations and to introduce new insights to readers.